Hello!
I hope that many of you enjoyed Sunday’s edition of Weekend Reading. This week’s Weekly Update covers the funding rounds of Speak, Sizzle, and MagicSchool and provides some additional thinking on the growth in venture funding for Workforce/Future of Work startups relative to more “traditional” EdTech.
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On to the update!
Funding / M&A
Speak raises $16M: San Francisco-based Speak is a language learning platform backed by OpenAI. The company started with a narrow-and-deep product development approach, targeting English language learners in South Korea to tune their models and build their customer base. The $27M in Series B funding that the company raised last November helped the company expand to 20+ markets. Presumably, this round of funding will be used to continue that expansion. / ETCH Assessment of the deal by Claire Talley
Sizzle AI raises $7.5M: San Francisco-based Sizzle endeavors to build the leading AI platform for personalized learning. Led by Meta’s former VP of AI, the company will start with a focus on question-and-answer tools for K12 STEM courses before expanding to other topics of inquiry inside and out of the traditional education system. / ETCH Assessment of the deal
MagicSchool.ai raises $2.4M: Denver-based MagicSchool is a portfolio of tools to help teachers work smarter and more efficiently. The company leveraged AI to rapidly develop and deploy these tools over the past year, including rubric, assessment (standards-aligned), and academic content generators as well as tools for student support, text leveling, and email responding. Funding from this round will go towards continued product expansion and expanding go-to-market efforts. / ETCH Assessment of the deal
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Story
Upskilling platforms see robust demand for courses amid EdTech slump
Context: Upskilling and higher education platforms secured close to $750 million across 116 deals in 2022, K-12 and test prep platforms, on the other hand, nearly halved to $1.7 billion in 2022 from over $3 billion in 2021.
Before I agree or disagree with the trend, it is important to note that it is pretty easy to manipulate the data to tell the story you want to see here. $1B+ of the money raised across 2021 and 2022 went to Byju’s - whose story is still unravelling - and varies based on whether you include debt, money raised but not wired, and whether you include the $400M+ funded by Byju himself and not institutional investors. Even beyond Byju’s, I am wary of extrapolating too much from the COVID craziness of 2020/2021.
All the same, the shift in investor demand from “traditional” EdTech - K12 and Higher Ed-related businesses - to Workforce/Future of Work/Upskilling (I’m calling it Workforce, but all are acceptable) does feel palpable. As far as I can tell, every new fund from an EdTech specialist in the past 2 years has included Workforce as a core part of their investment thesis. Some funds, like Achieve Partners have left EdTech almost entirely in favor of workforce development.
I’m resisting the urge to call this a pivot though; rather it is more like an extension of capabilities. From my own funding tracker, it looks like this year’s venture funding deals are 46% “traditional” EdTech deals by volume and 57% “traditional” EdTech deals by total dollars. While it may feel like - and has felt like to me! - more attention is being given to the Workforce category, the data suggests that “traditional” EdTech maintains a strong position in the market and venture deals in the Workforce space have been additive to the EdTech category overall. (caveat emptor that even my deal database will have its flaws and funding announcements lag the market by at least 2-3 months.)
Question of the Week
Results of last week’s poll: this is helpful! While volunteer writers will be free to write about the deals that interest them most, I will try to focus my own efforts on growth-stage deals moving forward.